Need Some Major Help . . .

Comments(9)

• 
  bobo231st October, 2003

  If you had lived there 2 years ...
  Or if it had been a rental ...
  
  But because it wasn't, unless I'm wrong you'll be paying some tax - but not much - and per the old saying no one ever went broke making a profit.

• 
  dsidhu31st October, 2003

  Ya thats what I thought about the tax thing=)
  
  The 1031 - only if it was an investment property.
  
  Thanks though.

• 
  DaveT1st November, 2003

  dsidhu,
  
  While you will be realizing a capital gain on the sale of your house, you still have an opportunity to minimize your capital gains taxes.
  
  If you have losses on paper in the stock market, sell those stocks to realize a capital loss. Use your capital losses to offset your capital gain, reducing your tax burden. Same approach for any other capital asset you may be holding with a loss on paper.
  
  Also, remember to reduce your net profit on the sale of your house by adding your selling expenses (including sales commission and other settlement expenses) to your cost basis.
  
  You are absolutely correct -- your primary residence is not eligible to participate in a 1031 exchange.

• 
  conflix1st November, 2003

  i'm no expert, but i'm almost sure that there is a law about buying a bigger residence. i think if you trade up to a bigger house withing 2 years, you don't have to pay a capital gains tax. i may be wrong, because i'm not all that familiar with exchanges or selling primary residence. but you might want to ask a CPA or someone if there is anything like that...
  [addsig]

• 
  DaveT1st November, 2003

  conflix,
  
  You are right about one thing -- You are wrong.
  
  When the tax code was changed in 1997, the residence rollover replacement rules were repealed.

• 
  InActive_Account3rd November, 2003

  Dsidu - May I ask why you are selling so soon after purchasing the home? There are some exceptions to the IRS rules which may allow you some exemption from the tax but you need to have a hardship situation (loss of job, etc.)

• 
  myfrogger3rd November, 2003

  Here is an article that I wrote to address this topic:
  
  http://www.thecreativeinvestor.com/Article415.html

• 
  dsidhu3rd November, 2003

  Thowell -
  
  My wife never liked the house too much because it was a double story and she has arthiritis which flares up and kills her knees.
  
  Just recently I read some articles and then recently read MyFrogger's article (Thank you). and we are going to see if can get an exemption - prorated.
  
  We never knew that she could use this as a possible excuse - So she is going to talk to her doctor and see if she can get a note - so we can move into a single story home and apply the exemption prorated.
  
  Next question - What paper work needs to be filled out?
  
  Hopefully this will work.
  
  Thanks everyone.

• 
  InActive_Account3rd November, 2003

  You usually do not report the sale on the tax return if the entire gain is exempted. You should keep all of your records of purchase and sale including the doctor's letter in case the IRA ever questions you about the sale.